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PEARSON PLC (PSON)

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Analysis summary4-Traders Strategies 

Pearson : Continuation of the bearish trend

05/02/2013 | 04:28am
Opinion : Bearish under GBp 1185
Target price : GBp 1120
Stop loss: GBp 1215
LONDON STOCK EXCHANGE
Consumer Publishing

The bearish trend of the Pearson' stock, initiated many months ago, may continue and send prices towards GBp 1119.

From a fundamental viewpoint, we note the high valuation of the company, as shown by a PER 2013 of 18.32x. Moreover, EPS estimates has been regularly revised downward by the Thomson Reuters consensus.

Technically, the trend is becoming bearish in the medium term as shown by the 20-week moving average which is now below the 50-week. However, the trend is bullish in the very short term, but this dynamic should be stopped by the GBp 1185 resistance, corresponding to the 100-day moving average. Thus, the stock may resume its bearish trend and come back to the GBp 1120 support.

Hence, it seems opportune to take a short position in Pearson at the current price. The main target will be the GBp 1120 support. A stop loss must be fixed above GBp 1185, in order to avoid a bullish reversal.

Pearson  : Pearson  : Continuation of the bearish trend
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Financial Ratios

Size 2014e 2015e
Capitalization 9 551 M GBP -
Entreprise Value (EV) 10 925 M GBP 10 745 M GBP
Valuation 2014e 2015e
PER (Price / EPS) 22,8x 19,8x
Capitalization / Revenue 1,95x 1,88x
EV / Revenue 2,23x 2,12x
EV / EBITDA 13,2x 11,3x
Yield (DPS / Price) 4,39% 4,51%
Profitability 2014e 2015e
Operating Margin (EBIT / Sales) 14,5% 16,4%
operating Leverage (Delta EBIT / Delta Sales) -0,97x 4,88x
Net Margin (Net Profit / Revenue) 8,41% 8,82%
ROA (Net Profit / Asset) 5,41% 6,08%
ROE (Net Profit / Equities) 9,40% 10,6%
Rate of Dividend 100% 89,5%
Balance Sheet Analysis 2014e 2015e
CAPEX / Sales   3,36% 3,45%
Cash Flow / Sales (Taux d'autofinancement) 14,0% 15,2%
Capital Intensity (Assets / Sales) 1,55x 1,45x
Financial Leverage (Net Debt / EBITDA) 1,66x 1,25x
Income Statement Evolution
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